Nishat Mills Ltd. (NML) announced its 4QFY25 financial results, reporting standalone earnings of PkR1.2bn (EPS: PkR3.34), compared to PkR1.0bn (EPS: PkR2.90) in SPLY, up 15%YoY. The result was below our expectations, mainly due to higher-than-expected taxation. Along with the result, the company announced a final cash dividend of PKR 2.0/share (Payout: 12%), according to a report by AKD Research.

• Revenue increased by 9%YoY to PkR43.5bn, compared to PkR40.0bn in SPLY, driven by higher export volumes and improved pricing. Notably, readymade garment exports rose 7%YoY during 4QFY25, as per PBS.
• Gross margins improved to 11.0%, up from 10.5% in SPLY, supported by declining cotton prices and energy costs amid lower coal prices and reduced grid tariffs.
• Distribution expenses increased by 30%YoY to PkR2.1bn, driven by higher export volumes.
• Other income declined by 15%YoY to PkR2.2bn from PkR2.6bn in SPLY, mainly due to lower interest income on loans from subsidiaries amid falling interest rates.
• Meanwhile, finance costs fell by 18% year-over-year (YoY) to PKR 2.0 billion, primarily due to a drop in policy rates, which partially offset the impact of a 16% YoY increase in total borrowings.
• Taxation remained higher than expected, with the effective tax rate standing at 48%, due to turnover tax amid lower profitability.
• This brings FY25 earnings to PkR6.0bn (EPS: PkR17.10), compared to PkR6.4bn (EPS: PkR18.11) in SPLY, down 6%YoY.
• We revise our target price upward and roll it forward to June ’26 to PKR 277/share, maintaining our ‘Buy’ stance. The upward revision is primarily due to an increase in the company’s portfolio value due to the recent rally.

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